Following U.S. and Israelistrikes on Iranbeginning February 28, 2026, a senior IRGC official declared the Strait of Hormuz closed and threatened to set ablaze any vessel attempting to transit. The strait is one of the most important global energy chokepoints, carrying about 20 percent of the world’s oil supply, roughly20.3 millionbarrels per day in 2024.

An Iranian Revolutionary Guards commander saidIran would fireon any ship attempting to transit the vital 21-mile-wide waterway, and an IRGC senior adviser said, “The Strait of Hormuz is closed. If anyone tries to pass, the heroes of the Revolutionary Guards and the regular navy will set those ships ablaze.” The claim was later disputed by U.S. Central Command.

The threat triggered a swift and broad withdrawal from the maritime insurance market. By Monday, March 2, most of the world’s protection and indemnity (P&I) clubs, the mutual insurers that cover third-party liabilities for roughly90 percentof the global merchant fleet, began issuing notices cancelling war risk extensions for vessels trading in the Middle East, giving 72 hours’ notice. The move was triggered by the withdrawal of reinsurance for those risks.

Japan’s MS&ADInsurance Groupalso suspended underwriting of war risk policies covering waters around Iran, Israel, and neighboring countries. Major shipping firms including Maersk, Hapag-Lloyd, and MSC diverted ships elsewhere.

War risk premiums surged to as high as1 percentof a ship’s value within 48 hours, up from around 0.2 percent the prior week, adding hundreds of thousands of dollars in costs per shipment. For vessels traveling to the Persian Gulf but not planning to transit the strait, hull war cover rates also hit 1 percent of ship value for seven days, compared to around 0.25 percent before the conflict began. Hapag-Lloyd introduced aWar Risk Surchargeof$1,500 per20-foot equivalent unit for cargo to and from the Arabian Gulf.

The result was a de facto closure: by March 3, only four vessels crossed the strait, a sharp drop from the seven-day average of roughly77 crossings. At least five tankers were damaged, two personnel killed, and around 150 ships stranded. “The war insurance market is facing what is essentially a de facto close of the Strait of Hormuz, based primarily around perception of threat rather than a tangible blockade,” said Munro Anderson of marine war insurance specialist Vessel Protect.

Oil pricesrose sharplyfollowing the conflict’s outbreak, surging more than 13 percent. The benchmark freight rate for Very Large Crude Carriers, used to ship 2 million barrels of oil from the Middle East to China, hit an all-time high of$423,736per day. The average price of gasoline in the United States rose more than 11 cents overnight to about $3.11 per gallon. Analysts warned prices could reach $120 per barrel if Gulf producers exhaust storage capacity and are forced to cut production.

Iraq had already cut output by1.5 millionbarrels per day. QatarEnergy halted LNG production after its facilities in Ras Laffan and Mesaieed were struck, sending gas prices soaring in Europe and Asia.

On March 3, President Trumpannounced two measuresvia Truth Social. First, he ordered the United States Development Finance Corporation (DFC) to providepolitical risk insurancefor all maritime trade traveling through the Gulf, particularly energy shipments, at a “very reasonable price” available to all shipping lines.

Second, he said: “If necessary, the United States Navy will beginescorting tankersthrough the Strait of Hormuz as soon as possible. No matter what, the United States will ensure the FREE FLOW of ENERGY to the WORLD.”

Source: The Gateway Pundit